Should Your Family Participate in Travel Hacking?

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This post is meant for beginners.

First things first. I’m not talking about anything illegal, I promise! Travel hacking involves leveraging frequent flyer miles and points in order to travel the world at a deeply discounted price. But doesn’t it only apply to those who constantly travel for work? Not at all. That’s a common misconception, and I’m here to show how your family can travel for close to nothing without taking even one paid flight. But first, let me tell you how I stumbled into this hobby/addiction.

My story

I moved to USA from Eastern Europe in the late nineties. At that point, I knew nothing about miles and points. Naturally, my American husband and I had to fly to Europe to visit relatives. So, the airline agent who sold me tickets suggested we sign up for frequent flyer accounts. It was free, so why not? Few years later, we had about 25,000 miles each, enough to fly within Continental USA for free.

But I saw something on the airline website that intrigued me. There was an offer for a co-branded credit card which would give 10,000 miles after just one purchase and paying an annual fee of $95. That would increase our mileage balances and allow us to fly to Maui instead. At the time, the airline tickets from Florida to Hawaii were running at $850 per person.

So, that’s what I did, and we ended up flying to Hawaii on award tickets after paying $190 in credit card fees+$10 in taxes. Of course, I canceled the credit cards in order to avoid paying another annual fee. Interestingly, just a few months later, I got a letter in a mail offering to sign up for the same exact card and receive the bonus again.

I went ahead and applied, and got another 10,000 miles. And this is what I’ve been doing ever since. I’ve used miles and points for hotel stays, flights to Europe, cruises and more!

Things in this hobby have changed so much over the years. In many ways, for the better, especially for those who are starting out. Right now, you can easily find an airline credit card that offers 50,000 miles once you fulfill the minimum spending requirements.

Some important considerations for travel hacking

The biggest concern people have is what this will do to their credit score. And it makes perfect sense because good credit is essential in the society we live in. While signing up for a new card does negatively impact your score, it usually goes down only 5-10 points per application. If your credit is good (above 700), the effect will be marginal. In fact, many times, your score will go up. Why?

There are many factors that go into credit score algorithm, among them utilization (how much available credit you are using). When you get a new card, it comes with a line of credit, which decreases your utilization. That, in turn, increases your score. Of course, it’s important to go slow, which is why I recommend people get just one card and see what it does to their credit score.

It’s also best to avoid new credit cards if you are planning to get a mortgage or a major loan within the next 2 years. Why 2 years? That’s how long it takes for a credit inquiry to fall off your file, so mortgage lenders don’t see it anymore. Obviously, if someone has been applying for a bunch of cards, it’s perceived as a red flag.

It’s also important to consider your own purchasing habits. If you are someone who tends to overspend when using plastic, then it will negate any rewards you will earn from sign-up bonuses. This is extremely important because the danger of buying things on credit that you can’t afford is very real. So, if this describes you, then this miles and points hobby, unfortunately, is not a good fit. See Beginner’s Guide to miles and points for more on this topic.

Go big or go small, it’s your choice

While I tend to switch credit cards constantly, it’s most certainly not for everyone. Many people will do well to get a few decent long-term cards while signing up for 2-3 new bonuses per year. Let’s face it, most families are super busy, and the last thing they need is to keep track of 10 cards.

This hobby is about using your limited spending so you can afford travel. For many, it means focusing on cash back instead of miles. Once again, the choice is yours. Some examples of best long-term cards for family are:

1. Amex Blue Cash Preferred  

You get 6% cash back on groceries (on up to $6,000 per year), 3% cash back on gas and department stores, 1% on everything else.  The card does have $95 annual fee, but Amex has various promos, so it’s easy to make up for it.

Leana’s personal referral application link (get $250 bonus after spending $1,000 in 3 months) and Nancy’s referral link.

2. Amex EveryDay Preferred

You get Membership Rewards points, a currency that transfers to miles. The card earns 4.5 points per dollar on groceries (on up to $6,000 per year), 3 points on gas, and 1.5 points on everything else. The catch is that you have to make 30 transactions in a billing period in order to get this payout. An easy way to achieve it is to buy $1 Amazon gift cards. This product has an annual fee of $95 but once again, you should be able to make up for it.

Leana’s personal referral application link (get 20,000 MR points after spending $1,000 in 3 months) and Nancy’s referral link.

These are just a  few examples. See my expanded list of “keeper” cards.  Every family is different, so it’s important to do the math and determine what will be the best fit for your unique situation.

Few examples of “low-hanging fruit” bonuses for family

Of course, the main allure of travel hacking is receiving a sign-up bonus through minimal effort. But which one should you choose? Once again, it will vary and largely depend on your goals and spending ability. Some cards require you to spend $5,000 in 3 months. Can you handle it?

If not, then maybe it’s best to stick to bonuses that have lower barrier to entry, like $1,000 or $2,000. My family has no problem spending $5,000 in 3 months, plus there are various ways to help me achieve that threshold.

Here are a few excellent choices to consider:

1. Chase Sapphire Preferred 

There is a joke in the miles and points community that Chase Sapphire Preferred is a gateway drug. You will often see it recommended first and there is a reason for that. The card earns Ultimate Rewards points which can be redeemed towards statement credit or transferred to valuable partners like Southwest and Hyatt on 1:1 basis. You can also use this currency towards revenue travel and get 1.25 cents per point.

The sign-up offer is 50,000 points after you spend $4,000 on purchases in the first 3 months from account opening, with an annual fee of $95 waived during the fist year. Those 50,000 points can be redeemed towards $500 check, which is a good deal in its own right.

But you can do better. If you transfer them to Southwest, you can use them towards around $750 in airfare. Like Hyatt resorts but can’t afford to stay in them? No worries, there are some nice ones that cost only 15,000 Hyatt points per night.

 

2.Barclaycard Arrival Plus World Elite MasterCard

Not everyone wants to spend time figuring out various sweet-spots in airline and hotel programs. Some prefer the simplicity of charging a travel purchase to a credit card and using rewards to offset it. In that case, Arrival Plus card is a good fit. You do have to spent $5,000 in 3 months in order to receive 70,000 points redeemable towards $700 in travel. First annual fee is waived.

There are some quirks to be aware of (like $100 minimum redemption threshold), but it’s hard to argue with value here. As long as you are able to meet minimum spending, this is a great deal.

If you have a business:

Ink Business Preferred Credit Card

The card earns Ultimate Rewards points, just like Chase Sapphire Preferred (see info above). You will earn 80,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening. That’s at least $1,000 toward travel when you redeem through Chase Ultimate Rewards travel portal. The annual fee of $95 is not waived. See this post on why it makes sense to apply for Chase cards first.

Personally, I wouldn’t renew any of the above cards, but YMMV. Either way, canceling them is easy and can usually be done via secure message in your online account profile. I don’t feel emotional when breaking up with large banks, and neither should you.

Bottom line

Of course, there is much more to miles and points hobby, and you can learn it by coming to our website on a regular basis. But I hope I gave you an idea on what travel hacking is all about. It is most certainly not rocket science, and basically involves being organized and disciplined with credit. If you can manage this, your family can travel for pennies on a dollar.

Full disclaimer: there is time/effort involved in order to make this whole thing worthwhile, and perhaps calling it a hobby is a bit of a stretch. Maybe a “part-time hustle for travel addicts” is more appropriate.

P.S. All three of the cards pay us commission if you apply through the site. Thanks for your support!

Click here to view various credit cards and available sign-up bonuses